Axe child benefit to save £5 billion, says think tank

A report drawn up by a former adviser to Work and Pensions Secretary Iain Duncan Smith recommends cutting child benefit Credit: PA

Child benefit should be scrapped to cut the amount of the welfare budget going to middle classes, a think tank has recommended.

Abolishing child benefit would save government coffers almost £5 billion and poorer families could be compensated through an increased universal credit payment, a report by Reform said.

Other recommendations in the report suggested welfare payments to disabled people could be taxed to increase savings in the social security budget.

The document, drawn up by a former adviser to Work and Pensions Secretary Iain Duncan Smith, comes as the Government attempts to find £12 billion in welfare savings.

It said the coalition government sought to tackle "middle-class welfare" but suggested David Cameron's Tory majority administration should go further to ensure that "social security expenditure is spent on those in need".

Reform also suggested the Disability Living Allowance (DLA) and its replacement the Personal Independence Payment (PIP) should be taxed, with consideration given to means-testing claimants, saving £0.9 billion.

The report was co-written by Charlotte Pickles, who was an expert adviser on welfare to Mr Duncan Smith between 2010 and 2012.

The report also recommended sickness benefits are reviewed, with the employment and support allowance (ESA) for people in the work-related activity group reduced to the level of jobseekers' allowance.

Reform also recommended a substantial increase in social housing stock in an effort to reduce the housing benefit bill, which increased from the equivalent of £16.6 billion in 2004/5 to £24.4 billion in 2014/15.

It criticised the flagship Conservative policy of extending the right-to-buy scheme to housing association tenants.

"This policy risks depleting the stock of social housing further and therefore increasing the housing benefit bill in the longer term," the report warned.